Equities decline after US losses, protests continue to weigh on the Hang Seng
|Asia Market Update: Equities decline after US losses, protests continue to weigh on the Hang Seng; Aussie 3-yr yield hits record low below 1% after unemployment data; China’s Liu He does not comment on US, key China data seen on Friday
General Trend:
- Hang Seng extends underperformance as protests continue, decliners include insurers and property developers
- Standard Chartered and HSBC also continue to drop
- Markets in Hong Kong later pare losses, government again delays meeting on extradition bill
- Hong Kong money market rates continue to rise; some have cited increased cash demand by banks amid protest-related branch closures and focus on quarter end
- HKD less volatile vs prior session
- China launched new high-technology stock board, Shanghai IT index outperformed in early trading
- Chip-related companies in South Korea and Japan decline, tracks US weakness
- Declines in shares of MUFJ and lower bond yields weigh on financials in Japan
- Australia’s Wesfarmers declines over 4% on cautious outlook
- Australia May unemployment rate higher than expected, more people entered the workforce
- Aussie and AU yields declined following the data as markets expect more easing from the RBA
- PBoC uses 28-day reverse repo for second straight session
- PBoC Gov did not comment on monetary policy
- Some economists believe China could announce policy easing measures in the coming weeks (China Daily)
- Japan sells 30 yr JGBs at lowest bid to cover since late 2017, yield declines
- Japan’s Q2 BSI indices declined q/q [BoJ Q2 Tankan survey expected to be released on July 1st]
- Japan Economy Min Motegi and USTR Lighthizer are expected to meet later today
- China’s key May data (including industrial production) due for release on Friday
Headlines/Economic Data
Australia/New Zealand
- ASX 200 opened flat
- (AU) AUSTRALIA MAY EMPLOYMENT CHANGE: +42.3K V +16.0KE; UNEMPLOYMENT RATE: 5.2% V 5.1%E
- WES.AU KMart Trading update: 2019 YTD Kmart SSS -0.2% y/y; Total Sales +1.3% y/y; YTD Target SSS -0.7% y/y; Total sales -1.3% y/y
- CAR.AU Examining the sale of 50.1% stake in Stratton Finance; Guides FY19 (excluding Startton) Adj Net A$130-132M; adj EBITDA 209-211M Rev 418-240M
- (AU) AUSTRALIA JUN CONSUMER INFLATION EXPECTATION: 3.3% V 3.3% PRIOR
- COL.AU CEO expected to announce a "strategic reset" next week ; said to be planning to layoff 450 employees at head office – SMH
Japan
- Nikkei 225 opened -0.4%
- 8306.JP May have impairment of ¥300B on its controlling stake in Indonesia JV, which could put Q1 into a loss, the first since it formed in 2005 - Nikkei
- (JP) JAPAN Q2 BSI LARGE ALL INDUSTRY Q/Q: -3.7 V -1.7 PRIOR; LARGE MANUFACTURING Q/Q: -10.4 V -7.3 PRIOR
- (JP) Japan Cabinet Sec Suga: PM Abe expects a frank opinion exchagne with Iran's Rouhani
- (JP) Japan MoF sells ¥699.7B v ¥700B indicated in 0.50% (prior 0.70%) coupon 30-year JGBs, avg yield: 0.3190% v 0.621% prior, bid to cover 3.47x v 4.56x prior (lowest BTC since Nov 2017)
- (JP) Japan Apr Tertiary Industry Index M/M: 0.8% v 0.4%e (highest since Oct 2018, first rise since Jan)
Korea
- Kospi opened -0.2%
- (KR) South Korea President Moon is hoping to meet with North Korea Leader Kim before US President Trump travels to South Korea later this month – Yonhap
- (KR) US State Dept: Ready to continue working level denuclearization talks with North Korea - Yonhap
China/Hong Kong
- Hang Seng opened -0.3%; Shanghai Composite opened -0.1%
- (CN) China CBIRC Vice Chairman Zhaoxing: Certain country is trying to curb China's growth
- (CN) China FX Regulator SAFE Chief Pan Gongsheng: FX market has been generally stable, fully confident to maintain FX market stability
- (HK) Hong Kong Legislator will not hold meeting today on China extradition bill (second delay)
- (CN) China Vice Premier Liu He: Room to expand financial support for quality GDP growth; China to step up counter cyclical measures - speaking at forum in Shanghai
- (CN) China CSRC Chief: China will ease entry barriers for overseas custodian services; China has approved ownership controls by 3 foreign brokers
- (CN) China CBIRC cheif Guo Shuqing: Will continue to support Shanghai building a financial center; financial system is operating in a stable manner; China's economy is overly reliant on bank loans - Lujiazui forum
- (CN) China PBOC Gov Yi Gang: PBOC to support cross border capital management in Shanghai free trade zone; will support Shanghai ownership limit removal as a trial - speaking at Lujiazui forum
- (CN) China PBoC Open Market Operation (OMO): Injects CNY100B in 28-day reverse repos v CNY35B combined in 7-day and 28-day prior; Net CNY90B injected v CNY25B drain prior
- (CN) China PBoC sets yuan reference rate: 6.8934 v 6.8932 prior
- (CN) CHINA MAY AGGREGATE FINANCING (CNY): 1.400T V 1.450TE
- (CN) CHINA MAY NEW YUAN LOANS (CNY): 1.180T V 1.300TE
- (CN) CHINA MAY M2 MONEY SUPPLY 8.5% Y/Y V 8.6%E
- (US) Pres Trump: reiterates expects to meet with Pres Xi at G-20 summit
- (CN) According to economists, moderate China inflation and the global dovish monetary environment may provide more room for the China authorities to adjust money and credit supplies as a tool to counter downside risks if trade tension escalates - China Daily
- HUAWEI.CN White House official: Expect to meet 2-yr deadline for Huawei ban for contractors in defense law
North America
- (US) DOE CRUDE: +2.2M V -0.5ME; GASOLINE: +0.8M V +0.5ME; DISTILLATE: -1.0M V +1ME
- (CL) Chile CODELCO: Regret workers' decision at Chuquicamata; strike to begin Friday
- (MX) Mexico Central Bank (Banxico) Deputy Gov Heath: Current rate of 8.25% is needed, cannot start easing cycle with so much risk
Europe
- (UK) Parliament rejects Labour-backed bid to block no-deal Brexit in 309-298 vote
- (UK) MAY RICS HOUSE PRICE BALANCE: -10% V -21%E (highest level since Oct 2018)
- (PL) White House confirms to deploy 1,000 additional US troops to Poland
Levels as of 1:20 ET
- Nikkei 225, -0.1%, ASX 200 flat, Hang Seng -0.9%; Shanghai Composite -0.1%; Kospi -0.7%
- Equity Futures: S&P500 -0.2%; Nasdaq100 -0.3%, Dax -0.3%; FTSE100 -0.3%
- EUR 1.1299-1.1286 ; JPY 108.53-108.16 ; AUD 0.6938-0.6910 ;NZD 0.6588-0.6568
- Gold +0.2% at $1,339/oz; Crude Oil -0.1% at $51.23/brl; Copper -0.3 % at $2.643/lb
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